Post-SONA, DOE starts tweaking priority list
(PE2 Note: Lenie Lectura of the BusinessMirror captures PE2’s post-SONA reflections on the need to fully enforce the EE&C Act within the first year of the new administration.)
THE Department of Energy (DOE), under the leadership of the agency’s new secretary Raphael Lotilla, has started sorting out priority issues in the power sector to address concerns on energy security and the need to develop indigenous energy sources.
He said top priority will be given to addressing uncertainties regarding investment incentives to the entire upstream sector, especially natural gas, after President Ferdinand Marcos Jr. pointed out that the country’s power supply is inadequate. “This is particularly true with the loss of Malampaya natural gas for the 1200 MW Ilijan plant due to declining field production,” said Lotilla.
Lotilla’s office would soon present a “clear articulation” of PD 87, which provides incentives to petroleum service contractors. “The uncertainty over the interpretation of PD 87 allowing the service contractor’s corporate taxes to form part of the government’s 60-percent net share has hindered investments and rollout in this sector. In order to ensure a stable investments regime across different administrations, we will seek legislative articulation of that policy,” said Lotilla.
Earlier, the Commission on Audit (COA) overruled the petition of the Malampaya consortium that income tax was already imputed in the government’s 60-percent share in the Malampaya royalties. The tax, it argued, was deductible from the government’s share of the Malampaya earnings.
The COA said there is no provision in the law saying that income tax of the contractors forms part of the government’s share. Back then, the COA noted in its 2009 report a P53,140,304,739.86 tax deficiency.
PD 87 was issued by the late former president Ferdinand Marcos to amend the earlier PD 8, which promotes the discovery and development of the country’s indigenous petroleum resources.
During the post-SONA forum, Lotilla said 100 percent of the country’s fuel requirements is imported. In the power sector, 45 percent of the power plants utilize coal for fuel and 80 percent of that coal is imported.
Another 11.8 percent of the fuel for power is oil-based. These, he stressed, show the country’s vulnerability to volatilities in global prices.
Lotilla said his office will work with the rest of the government to provide well-targeted assistance to the most vulnerable communities, and to shift to more electrification in mass transport and industry. “There are still more than a million unserved households in the country, with more than 800,000 in Mindanao,” he said.
On amendments to the Electric Power Industry Reform Act (Epira), Lotilla said the agency will also coordinate with the Energy Regulatory Commission (ERC) to achieve a level playing field and to promote competition in order to attract investments. “This is clear in his inclusion of Epira amendments relating to the ERC in his legislative agenda,” he said.
Of importance also, Lotilla added, is planning and rolling out of transmission facilities to avoid RE stranded power that cannot be brought to the market, as what happened on Negros Island.
Former Energy Secretary Vince Pérez, current chairman of Alternergy group of companies, meanwhile lauded President Marcos Jr.’s strong push for the development of RE to mitigate the impacts of climate change and provide sufficient power supply for the country.
“This is a strong statement and sets a clear direction for the energy industry to rally behind President Bongbong Marcos’s call to build new power plants and with the use of renewable energy,“ Pérez said, noting that Alternergy and its subsidiaries plan to bring some 1,245 MW of new renewable energy capacity in the next five years.
“Alternergy fully support’s President Marcos’s energy program. Renewable energy is an abundant resource in the country and will provide the Philippines with clean fuel to cushion the impact of climate change and at the same time continuous rise of imported fuel,” Pérez added.
The Developers of Renewable Energy for AdvanceMent (DREAM) also support Marcos’s pivot to renewable energy as his main energy policy. “We have been pushing the previous administration to transition to renewables instead of sticking to conventional sources of energy to no avail. Now, we are suffering from high oil and coal prices as we have added more of them in the power mix. It is time and long overdue. We are very happy with President Marcos’s energy thrust and we will collaborate well with his administration and DOE Secretary Popo Lotilla,” said DREAM President Atty. Jay Layug.
Meanwhile, the Institute for Climate and Sustainable Cities (ICSC) agrees that the Philippines should increase the level of energy production to meet its current demand.
“Fossil gas is the bridge, until the country has installed adequate RE power and storage capacity to meet growing demand. The necessary infrastructures should be in place to facilitate the just energy transition. However, possible asset stranding over the long term must be avoided considering the drastic reduction in prices and increase in efficiency of solar, wind and storage technologies,” said ICSC Senior Policy Advisor Pete Maniego.
He noted that many goals and policies under Epira remain unrealized. He said Epira must be strengthened to achieve resiliency, flexibility and connectivity in the power sector.
The Philippine Energy Efficiency Alliance (PE2), meanwhile, was hoping to hear “explicit scale-up of energy efficiency interventions as a cost-effective solution to support the energy security and decarbonization objectives of the Philippines.”
“The energy efficiency industry was expecting the President to commit the full enforcement of the Energy Efficiency and Conservation Act during the first year of his administration. And this could be achieved if the DOE maintains the policy momentum of its Energy Utilization Management Bureau in crafting the remainder of the pending circulars and guidelines under the said law,” said PE2 President Alexander Ablaza.